The cash flows associated with common stock are more difficult to estimate than those related to bonds because stock has a residual claim against the company versus a contractual obligation for a bond. Group of answer choices True False
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- Which of the following is true of a stock dividend? A. It is a liability. B. The decision to issue a stock dividend resides with shareholders. C. It does not affect total equity but transfers amounts between equity components. D. It creates a cash reserve for shareholders.Both stock and bond returns are based on the cash flows generated by the issuing firm. How do shareholders and bondholders differ in their claimof the firm’s cash flows? How doessuch claim difference cause the risk difference between stocks and bonds?Both stock and debt returns are based on the cash flows generated by the issuing firm. How do common shareholders and debtholders differ in their claim of the firm’s cash flows? How does such a claim difference cause the risk difference between common stocks and debts (including bonds)? essay format
- Explain the statement “The money market is necessary but not sufficient for the liquidity of securities on the stock market”The valuation of common stock is more complicated than the valuation of either bonds or preferred stock because... which of the below statement are true? I.Dividends of common stock are expected to grow at an uneven rate II. Cash flows of common stock are generally more uncertain III. The dividends of common stock are usually not declared IV. Cash flows of bonds or preferred stock are usually uncertainWhich of the following is not a defining feature of common stock? a residual claim on assets voting rights a residual claim on cash flows a fixed return
- The cost of retained earnings is less than the cost of ordinary shares because of *a. the issuance cost.b. agency costs of free cash flow.c. the taxation on earnings.d. the trust fund doctrine.Which of the following is a difference between stocks and bonds? Select one: a. cash flows to bondholders are not known and not promised, cash flows to stockholders are known and promised b. companies issue stocks to grow the company and issue debt to pay bills c. required returns on debt are typically lower than required returns on equity d. dividends are legal obligations of the firm; coupons are not. Clear my choiceThe valuation of common stock is more complicated than the valuation of either bonds or preferred stock because I.Dividends of common stock are expected to grow at an uneven rate II. Cash flows of common stock are generally more uncertain III. The dividends of common stock are usually not declared IV. Cash flows of bonds or preferred stock are usually uncertain
- why is money market necessary but not sufficient for the liquidity of securities on the stock marketWhich of the following statements is false? The cost of debt securities is highest due to their relatively low risk The cost of common stock is highest due to its relatively high risk The cost of preferred stock falls somewhere between debt and common stock None of the abovewhat is meant by “The money market is necessary but not sufficient for the liquidity of securities on the stock market”
